4 simple ways to protect yourself from financial scammers

Recent research shows, probably unsurprisingly, that high net worth (HNW) individuals are targeted more often by financial scammers than any other group of people. 

Furthermore, it’s become clear to me through conversations I have with our clients and others, that   internationally mobile businesspeople are being specifically targeted, because they have financial arrangements in so many different places.

Read on to find out more about some of the most common scams, how you can protect yourself, and an update on recent scams that have started being used that you should look out for. 

The greater your wealth, the more likely you are to be targeted

When it comes to financial scams, the temptation is often to assume that unscrupulous scammers tend to target the vulnerable – particularly the elderly – rather than HNW professionals. 

I suppose the belief is that if you are a wealthy professional, you are more likely to be aware of  financial fraud and will take steps to protect yourself. However, this is a misconception.

A Censuswide survey, reported by Financial Planning Today, reveals that HNW individuals are one and a half times more likely to believe they have been scammed than any other earnings group. They are also twice as likely to have actually been scammed. 

One in four HNW individuals see financial scams as the biggest risk to their wealth.

It’s also the case that the greater your wealth, the more likely you are to be targeted, and the more your assets are dispersed across different financial jurisdictions, the more susceptible you may be. 

A separate survey reported by Face to Face Finance of HNW individuals found that 53% of those with between £1 million and £2 million in investable assets reported having been a victim of financial crime. 

For those with assets between £2 million and £3 million the equivalent figure was a remarkable, and concerning, 66%. 

Advances in technology are often reflected in scam methodology

Financial scams are nothing new. What tends to change over time is the methodology used by the scammers. 

20 years ago, a common scam was an email from someone purporting to be in Africa asking for your help to transfer a large sum of money out of their war-torn country. 

These days, you are more likely to get a phone call showing a displayed number you will actually recognise saying your account has been targeted and you need to act quickly to protect your wealth.

“Whaling” scams – targeting senior business executives – have been common for many years. However, they have become more difficult to identify as scammers are able to research detailed information about the individual and business they are targeting. 

Because of this, scams are becoming increasingly sophisticated and, as a result, more difficult to unwind so you can get your money back. For example, a  Financial Times report from Action Fraud suggested that financial scam investigations only result in a 4% clear-up rate.

This makes it all the more imperative that you take steps to protect yourself. 

One of the most notorious scams occurred in Hong Kong

Thinking about financial scams reminded me of a shocking article I read in the South China Morning Post a couple of years ago. 

An elderly woman in Hong Kong received call from financial scammers who said her identity had been cloned and used for criminal purposes on the China mainland. 

They reassured her that to protect herself she just needed to transfer her wealth to a “safe” account where it could not be accessed by the supposed criminals who had stolen her identity. 

She followed their instructions and transferred more than HK$250 million (£26 million) into three bank accounts before realising she had been the victim of an elaborate and persuasive scam.

All the hallmarks of a typical scam are present in this story – from the targeting of an individual known to be wealthy, to the use of a common “scare” story while adopting a reassuring tone to give the impression that the scammers were actually going to help.

There are some simple ways to protect yourself

The idea that you may be being targeted is clearly distressing, especially given the potentially large sums of money that could be at stake. 

Four very simple ways to protect yourself are:

1. Deliberately slow down when you’re dealing with financial issues online or over the phone. Scammers will try and rush you, so you make decisions without careful analysis. By taking your time you’re more likely to see through any sleight of hand.
2. Change your passwords regularly. Your personal financial information is incredibly valuable to fraudsters, so you should take every possible step to protect it.
3. Automatically be on your guard if you get any unexpected communication – email or phone call – about a financial issue.
4. Remember the “golden rule” when it comes to protecting yourself from financial fraud: if something appears to be too good to be true, it probably is.

As you’ve already read, scammers deliberately target the elderly. so ensure your relatives are aware of the dangers and take steps to help protect them wherever possible. 

Using an adviser can help reduce the chances of you being scammed

One of the best ways to avoid becoming the victim of a financial scam is to work with a financial adviser. 

A trusted financial professional involved in your finances can help let you know if an investment looks too good to be true and can help prevent a number of easy scams. 

It also means that you aren’t doing as much of the work around your finances as you would do normally, which automatically means a reduction in the chances of you falling victim to a scammer.

Here at Charlton House, we are aware of our responsibilities in this regard. We follow rigorous procedures and are continually looking for ways to improve our systems. 

Indeed, our operations director in Hong Kong, Tat Wong, is currently in the middle of a project looking at this.

Get in touch

If you’re concerned about financial scams and would like to talk about taking steps to protect yourself, please get in touch

You can contact us by email or, if you prefer to speak to us, you can reach us in the UK on +44 (0) 208 0044900 or in Hong Kong on +852 39039004.

Please note

This article is for information only. Please do not act based on anything you might read in this article.